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									Traceability, Assurance and Bio-
 Security in the Food System:
    Livestock Sector Issues
   Presented at Farm Foundation Traceability and Quality
                 Assurance Panel Meeting
                   Kansas City, Missouri
                   November 19, 2003

                 DeeVon Bailey, Ph. D.
              Department of Economics and
              Cooperative Extension Service
                  Utah State University
                    Logan, Utah USA
Reasons for Traceability – Inject
Accountability at Each Level of the
Marketing Chain
• Lumber – protection of “old-growth”
  forests
• Diamonds – reduce trade in “conflict”
  diamonds
• Food – food safety/food quality
The Hierarchy of Consumers’ Food Preferences. Source:
Jean Kinsey, University of Minnesota
US Livestock System Relative to TTA

• Traceability not mandatory
• Viewed as a private (market) good rather than as a
    public health issue (public good)
•   Willingness to pay has been a central question in the
    past
•   Canadian BSE crisis has been a “wake-up” call
    – National Animal Identification Task Force
        • 48-hour traceback goal
        • Target for animal identification in US is 2006
• Country-of-Origin labeling
    – Processors and retailers demanding third-party certification of
      origin
U. S. Red-Meat System Lagging Competitors
and Customers in Terms of Traceability and
Assurance Systems?
• Liddell and Bailey (2001)
  – Yes, U. S. pork marketing system in terms of
    traceability, transparency, and assurance (TTA)
• Weakness was in “assurance” programs
  – Food safety programs beginning at the farm level
  – Credence quality assurances (other than food safety,
    taste, grade, etc. but which are still valued by some
    consumers)
Areas of Concern about TA Identified by the
Panel During January Meeting

•   How TA contributes to the value and cost of food
    products
•   Responsibilities of the public and private sectors
    regarding the implementation of TA food systems
•   How TA affects the risks and potential liability faced by
    participants in the food marketing chain.
•   Technical issues and emerging technologies that
    facilitate or are barriers to TA
•   How TA might affect the structure of the US food
    industry
Public vs. Private Goods
• Traceability systems have been implemented for
    different reasons and at different speeds
    – EU – public health issue = public good = regulatory
      requirement
    – US – market issue (willingness to pay) = private good
      = private marketing chain decision
• Determining the role of the public and private
    sectors depends on the different public goods
    (public role) and private goods (private role)
    that can be generated with TA
•   Also depends on the credibility of each sector
Possible Public Goods

• Animal disease control and eradication
• Bio-security issues
Private Goods – What Are Consumers
Willing to Pay for?
• Results from Dickinson and Bailey for auction
  experiments held in the US, Canada, Japan, and the UK:
• Traceability valued to some extent by itself but more
  valued as a means of verifying other characteristics such
  as added food safety
• However, traceability is not merely an extra cost of
  production – it can add value from a marketing
  perspective, but likely can rely on WTP for traceability to
  be the driving force for its implementation
• Market appears to be quite general and not driven by
  demographics
What Technology Can Do
• Data gathering and recording
  – ID system (ear tag, micro chip, etc.)
     • Requires standards for premises and animal ID
  – Data entry and uploading
     • Electronic or manual
• Data basing
• Data compilation and reporting
• But, what data should be gathered and who
  should have access to the data and when?
Technological Capability of
Traceability Systems
                     Food Safety




     Animal Health                 Food Quality
Who is Credible?

• Whom do consumers trust to make
  different certifications?
• Study conducted in the U. S. and the US
US and UK Certifying Agencies and Brand
Names Used in the Study

• US                             • UK
• Certifying Agencies:           • Certifying Agencies:
  – US Inspection (USDA)           – British Farm Standard (FS)
  – USDA Process Verified          – Freedom Foods/RSPCA
    (PV)                             (FF)
  – Certified Angus Beef (CAB)     – British Meat (BM)
  – Organic (OB)                   – Fair Trade Federation (FT)
  – Natural Beef (NB)              – Soil Association Organic
• Brand Names                        Standard (SA)
  –   Farmland (FL)              • Brand Names
  –   Chairman’s Reserve (CR)      –   Sainsbury’s (SB)
  –   Tender Choice (TC)           –   Tesco (TS)
  –   E. A. Millers (EA)           –   ASDA (AD)
  –   Smiths (SM)                  –   Somerfield (SF)
  –   Albertsons (AL)              –   Safeway (SW)
  –   Macey’s (MA)
Certifying Agencies/Groups Considered in
the US and the UK as the Most or Least
Trusted to Complete Certifications
• US                    • UK
• Federal government    • National government
    inspection              inspection
•   State government    •   Local authorities
    inspection          •   Private companies
•   Private companies   •   Producers
•   Producers           •   Food retailers
•   Food retailers      •   Special interest
•   Special interest        groups
    groups
Some Observations for the US
• CAB seen as a “quality” indicator
• USDA seen as a “safety” indicator
• Brand names seen as signaling both safety and
    quality
•   CAB had higher quality scores with “initiated”
    groups than “uninitiated.” Store brands rated
    lower than manufacturer brands
Observations Relating to the UK

• Certifying Agencies seen as signaling
  quality, safety, and environmental
  responsibility
• A strong environmental component exists
  in the Sainsbury’s “score” (Sainsbury had
  the highest rating)
US Relative Frequencies for Most Trusted
Agencies to Conduct Specific Certifications

            80
            70
            60
            50
    Percent 40
            30                                   Gov't
            20                                   Company
            10                                   Producer
             0                                   Retailer
                 ty




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                                                 Special Interest
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                        Characteristic
US Relative Frequencies for Least Trusted
Agencies to Conduct Specific Certifications

            50
            45
            40
            35
            30
    Percent 25
            20                                   Gov't
            15                                   Company
            10
             5                                   Producer
             0                                   Retailer
                 ty




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                                                 Special Interest
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                        Characteristic
UK Relative Frequencies for Most Trusted
Agencies to Conduct Specific Certifications

            45
            40
            35
            30
    Percent 25
            20                                   Gov't
            15
            10                                   Company
             5                                   Producer
             0                                   Retailer
                 ty




                                 al
                        al




                                             t
                                                 Special Interest
                                          en
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                       m
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                                      nm
                             So
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                              En




                        Characteristic
UK Relative Frequencies for Least Trusted
Agencies to Conduct Specific Certifications

            70
            60
            50
            40
    Percent
            30                                   Gov't
            20                                   Company
            10                                   Producer
             0                                   Retailer
                 ty




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                        al




                                             t
                                                 Special Interest
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                        Characteristic
Conclusions
• US participants perceived manufacturer brand
    names as superior to store brands in terms of
    quality and food safety attributes.
•   UK consumers indicated that food retailers
    provide the highest levels of quality and food
    safety for beef products of the groups
    considered in the study.
•   Private sector in both the US and UK appears to
    be preferred over government to make
    certifications for animal welfare, social
    responsibility, and environmental responsibility.
Focus of this Meeting
• Role of public and private sectors?
• Role of technology – what it can and
  cannot do
• Designing an efficient and credible system
  – Credible to consumers
• What should be communicated to policy
 makers about the issue of traceability and
 quality assurance?

								
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